Mike Ashley’s Frasers Group plc has made an offer for the 63% of Mulberry Group that it does not already own, valuing the luxury handbag and accessories maker at about £83 million.

In a statement on Monday, Frasers Group said it had not been informed in advance of Mulberry’s plan, announced on Friday, to raise cash by selling new shares to outside investors and existing shareholders, and said it could offer better terms. 

Frasers said it made a non-binding indicative offer for Mulberry over the weekend, but was not satisfied with the response. As a result it has made what it called “a possible cash offer” worth 130p per share for the shares it does not already own, valuing Mulberry at about £83 million overall. 

That represents a premium of 30 per cent over the share sale price proposed by Mulberry on Friday and is about 11% over Mulberry’s closing price last week. Mulberry shares jumped 9% to 128p on Monday.

“As a committed long-term investor in Mulberry, Frasers would have been willing to underwrite the subscription in its entirety, potentially on better terms for the Company. Given this total lack of engagement, we believe the status quo to be an untenable position for Frasers and the other minority holders of Mulberry shares,” Frasers said on Monday. 

“We have long been supportive of the brand and commercial opportunities available to the Company. With our leading retail expertise and presence, and best in class distribution capability, we believe Frasers to be the best steward for returning Mulberry to profitability.”

Frasers first invested in Mulberry in February 2020 and grew its holding to about 37% that same year. Since then Mulberry has struggled with rising costs and declining consumer spending. Auditors noted a “material uncertainty related to going concern” in their latest annual report. 

“As a 37% shareholder, Frasers will not accept another Debenhams situation where a perfectly viable business is run into administration,” Frasers said. 

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: ‘Mike Ashley’s frustration with Mulberry is plain to see. Investors may also be losing patience, given that Mulberry’s shares have fallen by 52% over the past year.”

“Mulberry’s core customers aren’t as insulated as the super-rich from the pressures whipped up in an era of high interest rates and an uncertain economic climate. China remains the engine of growth for the luxury sector and those brands not winning the eye of approval from the super-wealthy shoppers in Shanghai, Beijing or Chengdu seem to be faltering. Mulberry is positioned in the middle of the luxury market and has struggled to attach the exclusivity tag.

“Frasers Group has already been taking steps to move upmarket, given that its upped stakes in Hugo Boss and its portfolio also includes Savile Row tailor Gieves & Hawkes. Owning Mulberry outright would bolster that plan and would offer a deeper well of finance to help turn the brand’s fortunes around.”